Archived press release

Competition Commission urged to act on new evidence from farmers

8 December 2006

Friends of the Earth is calling on the Competition Commission to put much stricter rules in place to govern the way supermarkets deal with their suppliers, following new evidence from farmers [1].

The environmental group also wants to see an independent regulator to enforce the new rules. In a survey, more than one third of farmers responding told Friends of the Earth that the prices paid by supermarkets barely covered their costs.

The environmental group surveyed 100 farmers in October 2006 to find out how they were treated by the supermarkets they supplied. 33 farmers responded. Key findings included:

. More than a third of all farmers (35%) said that they received the same as or less than the cost of production for their produce. The vast majority of those being paid more than the cost of production were only being paid "just over".

• A significant proportion of farmers (39%) said that their dealings with supermarkets were having a negative financial impact on their business.

• Supermarket trading practices had forced nearly a third (29%) of all farmers to put investments and innovations on hold.

• Nearly one third (32%) of respondents had complained to the supermarkets or their intermediaries about trading practices but only one felt that their complaint had been dealt with satisfactorily.

• Almost a quarter (23%) of all farmers had been forced to waste packaging or re-package products as a direct result of supermarket actions. One farmer was left with over 20,000 obsolete bags due to a supermarket changing its poly-bag design.

Friends of the Earth supermarkets campaigner Sandra Bell said:

"It is clear that farmers are still being squeezed so hard by the big supermarkets that they are struggling to make ends meet. As a result some are leaving the land. The Government has failed to redress the balance between these all powerful retailers and the farmers that supply them. The Competition Commission now has the opportunity and the powers to put this relationship on a fairer footing. A failure to act now will be nothing short of a disaster for farmers and our countryside"

The Competition Commission is currently investigating the big supermarkets due to suspicions that their behaviour may be distorting competition and harming consumer choice. Earlier this year the Commission confirmed that it would be looking at the way supermarkets treated their suppliers; and whether suppliers had to reduce levels of investment and innovation as a result. It also said it would examine the impact the Supermarket Code of Practice on relations between supermarkets and suppliers. The Code had been brought in following the last supermarkets inquiry in 2000 but has been slammed by suppliers for being ineffective.

The current inquiry is a key opportunity to get better protection for suppliers but the Commission has recently stressed that it needs more evidence in order to act - fuelling fears that yet again the supermarkets will be let off the hook. Friends of the Earth hopes that the evidence from this survey will help the Commission to take the necessary steps to halt abuse of supermarket power but is also urging more farmers to come forward and give evidence to the Inquiry.

Comments from farmers who responded to the survey, but who wish to remain anonymous, reveal just how tough conditions have become [note 2]. Budgens, the Co-op, Morrisons, Sainsburys and Tesco were all named in the survey as imposing unreasonable trading practices on the farmers.

Friends of the Earth is concerned that as more and more British farmers go out of business, Britain will become more dependent on food imports. The only farmers that will be able to survive will be the biggest most intensive businesses which could result in greater environmental damage to our farmed land and food will have to travel further to reach us, resulting in more and more food miles.

Notes

[1] Full results of the survey are available at:
www.foe.co.uk/resource/media_briefing/farmer_survey06.pdf(PDF)

[2] Further details of the farmers responses are included in our briefing (see link above). Friends of the Earth has also spoken to some of the farmers who responded to the survey:

A fruit grower who supplies a major supermarket told Friends of the Earth that he has to pay a fee of £25,000 to the supermarket just to be listed as a supplier and then had to give back three per cent of his turnover to the supermarket. He grubbed up all his pear orchards this year with the fruit still on the trees as it was simply not worth selling. He also described how each year he ends up with thousands of plastic bags wasted because the supermarkets change their designs for marketing purposes - as a district councillor this concerns him because he is well aware of the problems of disposing of plastic bags in landfill sites. He added that the supermarkets make money on the plastic bags because they insist that the growers buy from them rather than direct from the bag suppliers.

A farmer told Friends of the Earth that he had to sell his dairy cows because profits were so low. He used to sell organic milk to a major supermarket via a co-operative and stressed that the price pressure came from the supermarket. He described how the supermarkets overestimated the market for organic milk, persuaded farmers to increase production with the promise of a stable and fair price only to backtrack on that when they realised their mistake. This farmer has diversified with some income now generated from a non-farming business but still produces some vegetables for a farm shop which he describes as much more rewarding than selling to the supermarkets.

A tomato grower who supplies a major supermarket told Friends of the Earth that he had no money left for redevelopment" in his business due to the way in which the supermarkets operate. He also said that it had become "hard to make ends meet". This grower had experienced all the practices listed on our questionnaire including being asked for a retrospective reduction on an agreed price and having to meet the cost of a supermarket forecasting error.

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Published by Friends of the Earth Trust